Published by Global Banking & Finance Review®
Posted on October 29, 2025
4 min readLast updated: January 21, 2026
Add as preferred source on GoogleUBS's Q3 profit surge is overshadowed by concerns over liabilities from Credit Suisse bond write-down, affecting investor confidence and share prices.
By Ariane Luthi
ZURICH (Reuters) -UBS reported a surge in third-quarter profit on Wednesday, but investors' focus quickly turned to billions of liabilities Switzerland's top bank could face from the disputed write-down of bonds during its takeover of rival Credit Suisse.
UBS said it intended to appeal a Swiss court decision, already challenged by national market regulator FINMA, that ruled the writing off of 16.5 billion Swiss francs ($20.80 billion) in Credit Suisse AT1 bonds during its state-engineered takeover by UBS was unlawful. If upheld, the ruling could result in billions in liabilities, but UBS said it had no plans to make any provisions in relation to the case.
"We don't believe there is a liability," Chief Financial Officer Todd Tuckner told analysts.
"We believe the write-down was in accordance with the contractual terms of the AT1 instruments and the applicable law." He noted, however, that the bank had no indemnity from the Swiss government.
UBS said the appeals process generally takes about a year, while any subsequent proceedings could take several years.
The bank's shares gained 2.5% in early trade after it reported a 74% surge in quarterly profit to $2.5 billion, nearly twice the consensus estimate, but later surrendered early gains and last traded 0.9% lower.
While noting a strong set of results, Citi analysts highlighted a lack of clarity surrounding the bank's future business model given pressure within Switzerland on UBS to boost its core capital as part of efforts to safeguard financial stability.
Legal proceedings around the Credit Suisse bond write-down were adding another layer of uncertainty, they said.
Bank Vontobel analyst Andreas Venditti said those weighed on the share price despite the bank's assurances that it saw no need to set aside additional capital.
SHARE BUYBACKS ON TRACK, UBS SAYS
UBS CEO Sergio Ermotti also said the bank was confident in its plans for $3 billion in share buybacks this year and its financial targets for 2026.
"We're going to complete our current outstanding share buyback plan," Ermotti said, adding that UBS expected at year-end to accrue for share buybacks to be executed during 2026.
UBS noted, however, that global economic uncertainties, a strong Swiss franc and higher U.S. tariffs were clouding the outlook for the Swiss economy.
While deal activity was expected to remain healthy in the fourth quarter, "sentiment can shift quickly as confidence in the outlook is tested," the bank said in a statement.
It mentioned a prolonged U.S. government shutdown as a factor that could delay capital market activities.
LEGAL PROVISIONS RELEASED
UBS posted its best results since one-off factors related to the integration of Credit Suisse led to a profit of over $27 billion in the second quarter of 2023.
A release of legal provisions worth $688 million contributed to its earnings beat. They were mainly related to the resolution of Credit Suisse's residential mortgage-backed securities business and a UBS case in France.
UBS attracted $38 billion in net new money to its global wealth management division and $18 billion to asset management, bringing total invested assets close to $7 trillion.
Strong inflows from Asia more than offset outflows in the Americas, where UBS this week applied for a U.S. banking license.
In UBS's investment banking division, revenues jumped 52% year-on-year in global banking and 14% in trading, marking a record third quarter for both these business areas.
Credit Suisse's integration progressed further, with over two-thirds of its client accounts already having been migrated, UBS said.
The bank, which has been lobbying to soften proposed capital rules it says would require an additional $24 billion, said it would continue to contribute to the debate on banking regulation in Switzerland, without providing further detail.
Reuters reported last month that Switzerland and UBS are, in private, signalling a willingness to compromise on capital rules, potentially paving the way for parliament to settle on lower requirements acceptable to the government and the bank.
($1 = 0.7931 Swiss francs)
(Reporting by Ariane Luthi; Additional reporting by Dave Graham; Editing by Edwina Gibbs and Tomasz Janowski)
A bond write-down occurs when a bond's value is reduced on the balance sheet, typically due to a default or a significant decline in the issuer's creditworthiness.
Capital requirements are regulations that require banks to hold a certain amount of capital reserves to mitigate risks and ensure stability in the financial system.
Credit risk management is the process of assessing and mitigating the risk of loss due to a borrower's failure to repay a loan or meet contractual obligations.
Financial stability refers to a condition where the financial system operates effectively, with institutions able to withstand economic shocks without significant disruptions.
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